Stephen Mandel's Top 3 Stock Gainers
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The equity investments of Lone Pine Capital, the hedge fund managed by Tiger cub, Stephen Mandel was worth approximately $15.93 billion as of December 31, 2012 based on its latest 13F filing with the Securities and Exchange Commission (SEC).
During the fourth quarter, Mandel’s investment in the technology industry accounts 32.9 percent of his portfolio. His three largest stock holdings are Priceline.com (NASDAQ: PCLN), Google (NASDAQ: GOOG), and Cognizant Technology Solutions (NASDAQ: CTSH).
Mandel increased his stake in Priceline by 354, 525 shares to more than 1.77 million shares worth over $1.09 billion. The stock accounts 6.89% of his portfolio. Over the past decade, the company recorded a revenue growth of 12.4 percent, EBITDA growth of 53.5 percent and book value growth of 32.8 percent. During the previous quarter, the company posted strong financial result with $1.7 billion revenue and $756 million operating income or $11.66 EPS (GAAP). Its overall travel booking was $7.8 billion. Priceline agreed to acquire Kayak making it the largest travel agent worldwide. The merger will boost its airlines business, which only represents 1.7 percent of its revenue.
Currently, Priceline headwinds include approximately 50 lawsuits related to payment of hotel occupancy and other taxes filed by cities, counties, and states. Almost 70 municipalities & 8 states initiated audit proceedings against the company. These lawsuits could cost the company millions of dollars to defend or settle every claim.
On the other hand, Google represents 6.89 percent in Mandel’s portfolio. His total position in the search engine giant is more than 1.5 million shares worth approximately $1.1 billion. Google is one of top 10 stock picks of 374 investors during the quarter. Google’s stock price rose from more than $556 to $800 over the past 12 months.
Motley Fool senior technology analyst, Eric Bleeker believes that Google is the new Apple citing an upgrade from CLSA Research and Bernstein Research for the stock to a $1000 per share. Interestingly, analysts made the same speculation for Apple last year, but the stock declined from its highest level at around $705 per share to $450 per share, as of this writing. Does it mean Google will experience the same thing? I believe not. Google has a better chance to reach the $1000 target because of the dominance of its products and services. There is no doubt that its search engine accounts the largest share in the market. According to comScore, Google sites account 67% in the U.S. search marketplace in 4Q12. Google’s Chrome browser & Android mobile platform are widely used by consumers around the world. The YouTube has become increasingly attractive for advertisers. In other words, Google’s revenue sources are growing.
R&D is the heart & soul of any technology company to sustain growth and profitability. Google is one of the most innovative companies worldwide, and it continuous to improve, innovate, and introduce great products. Over the past five years, the company’s average quarterly expense for R&D is $1.07 billion, and the maximum was $2.01 billion.
The company recently launched the Google Fiber, an internet service and TV network that is 100 times faster the broadband. Google Fiber is currently available in Kansas City. Its newest product is the Google Glass, a computer eyewear that allows users to search, chat, navigate, and take photographs by using voice commands. It will be available in the market this year.
Google’s initiatives demonstrate that its management led by co-founder & CEO Larry Page is steering the company towards success in the years ahead.
Meanwhile, Cognizant Technology Solutions, the third largest stockholding of Mandel accounts 5.06% in his portfolio. The hedge fund manager owns more than 10.9 million shares with approximately $806.22 million market value. The company is one of the leading providers of information technology (IT), consulting, IT infrastructure and business process outsourcing worldwide.
During the fourth quarter, Cognizant’s revenue increased by 17% year-over-year to $1.95 billion. Its GAAP net income was $278.8 million, or $0.92 per diluted share. For the full year 2012, the company’s total revenue was $7.35 billion, up by 20% year-over-year and its GAAP net income was $1.05 billion or $3.44 per share. The company expects its FY13 revenue to increase to approximately $8.6 billion and GAAP EPS to $3.95 per share. Over the past five years, the company’s financial results consistently moved upward.
Cognizant’s stock value climbed from around $53 to $79 per share over the past 52-week range. The company has a $22.95 billion market value. The amount of its total assets is approximately $6.5 billion and about $1.66 billion total liabilities, but zero long-term debt as of 2012. This indicates that it has a strong financial position. Cognizant has been included in Fortune’s Fastest Growing Companies for ten consecutive years in terms of revenue and EPS growth rate.
Mandel’s top three stocks—Priceline, Google, and Cognizant Technology Solutions have solid earnings and revenue growth rates over the past twelve months. These companies will succeed further and will bring substantial value to shareholders in the quarters ahead.
MarieCabural has no position in any stocks mentioned. The Motley Fool recommends Google and Priceline.com. The Motley Fool owns shares of Google and Priceline.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!